Living Wages

We have the perverse situation where the minimum wage often results in huge state subsidies – family credit being the most obvious. The minimum wage isn’t enough to live on. Hence the Living Wage campaigns and arguments.

I’m delighted that Lib Dem minister Vince Cable has done so much to raise both the minimum wage and the Living Wage.

But we need to eliminate and replace the minimum wage with a Living Wage. People should be paid enough so that their jobs are not subsidised as a matter of norm by the state.

Part of this is ensuring policies to see housing costs become practical – we need so many more homes to cope with our rapidly increasing population.

The other factor is people on the minimum wage are so cheap employers rarely have the foresight to invest in them and boost productivity. Forcing wages to go up would see more employers invest in their team members. However, it could make the UK even more attractive to non British citizens so a solution to this is needed.

Only when work truly pays will we see labour productivity rise. Only then will we see a real end to the curse of poverty.

 

 

3 thoughts on “Living Wages

  1. Edis Bevan says:

    The minimum wage should always be the base from which we can work for better things…

    But what is actual situation in terms of take-home pay?

    A single adult person working a full working week at the current hourly minimum wage of £6.50 would get £12675.00 annual gross pay. Assuming no other income and no pension contributions, this would (this year) mean paying £535.00 in income tax and £566.28 in National Insurance. Total deductions £1101.28 and net takehome pay £11573.72

    I think that person would not be qualifying for great sums in benefits. Anyone done some actual calculations?

    With the tax threshold going up for next tax year someone on £6.50 an hour full time will get more takehome pay..

    in tax year 2012-13 someone on £6.50 an hour would have paid £914 in tax and £608.40 in NI, that is £421.12 a year more.

    (All calculations done by me using online tax and benefit calculation tools.)

    What is the gap between £11573 a year and a living wage? Suspect answers will be different in London to elsewhere…

    Serious questions. I don’t know the answers. I think we could do with some spreadsheets to tweak out assumptions.

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